Tax Day

Eleven years ago I received a job offer from a company in Edmonton, Alberta. Due to the unique circumstances of the offer, I was obliged to decline. The passage of time since then has not dulled the angst I feel over having had to render such a decision. Edmonton is one of my favourite cities, and I have many connections there--friends, school (I attended the U of A), business associates. If I had been able to accept I would have been a Canadian citizen by now, and that knowledge hurts more than anything else about the sad particulars of the long-ago choice I had to make.

When I received the offer I was of course elated, and I went about the business of determining exactly what I would have to do in moving across the border. One of the things I investigated was taxation. At the time, Alberta had no provincial income tax, but I wanted to know what I would have been paying in Canadian federal tax, given the agreed-upon salary with the company in Edmonton and reasonable assumptions about my personal situation once I had moved. I purchased tax software at Zellers and did my analysis. I was pleasantly surprised to learn that the federal tax was not as high as I had imagined, but the tax remained significantly higher than anything I had been paying in the states. After exemptions and deductions I don't believe I've ever had to pay more than 10% of my gross income in taxes; my tax burden in Edmonton would have been about twice that level.

The short article in today's Globe and Mail was enlightening (http://www.theglobeandmail.com/globe-investor/personal-finance/tax-centre/do-canadians-really-pay-more-taxes-than-americans/article1981740/). Angie Mohr wrote a very thoughtful analysis of tax structures in both countries and concluded that no blanket statement could be made regarding comparative tax burden between the two countries. Because of deductions and exemptions tailored to specific sub-groups of taxpayers on both sides of the border, it was simply not possible to make sweeping statements without looking at clusters of factors that would render the analysis virtually impossible to follow. She did provide enough information, though, for a bonehead like me to figure out that the comparative level of taxation is much closer than I had imagined. For instance, the fact that my taxes would have doubled in Alberta relative to what I was paying in Colorado was due to two factors that likely would not have existed once I moved to Alberta. On top of that, I was not factoring in the $3600 I had paid in medical fees in Colorado--most of which I would not have had to pay in Alberta, thanks to Canadian Medicare. Factoring in medical costs and eliminating the two other extenuating factors, the out-of-pocket cost of living in Alberta and Colorado would have been about the same.

Even in the face of what I then considered higher taxes, I was more than ready to move. Frankly, even if the tax burden had been four times higher, I would have been anxious to move. Higher taxes mean less disposable income. But life has so very little to do with what I can purchase, and so very much to do with who I am and the person I would like to be. Being a selfish, money-hoarding person is not on my list of favoured life outcomes.

PM
April 15, 2011